Anchor developer claimed he had warned Do Kwon over the obnoxiously high 20% interest rate Anchor Protocol offered for the depositing of Terra.
Who could have guessed there were warnings of the Anchor Protocol 20% interest rate. It appears that a developer of the Anchor Protocol might have seen the crash of Terra and Luna coming.
He said that he had warned Do Kwon founder of Luna about the 20% interest rate, and when he designed the Anchor Protocol he made sure the platform could take just a 3.6% interest rate to ensure stability. But apparently, Do Kwon never listened to the warnings.
Developer Warnings About Anchor Protocol 20% Interest Rate
Mr. B, a developer of the Anchor Protocol, states that the platform was built to offer an interest rate of just 3.6%, but this changed at the very last minute.
Anchor Protocol which was built like a bank savings account but with a 20% interest for depositing Terra. According to a core developer of this platform, he designed this platform to only be capable of offering an interest rate of just 3.6%, but this was tampered with and increased all the way up to 20% just a week before the release so as to attract more investors.
“I did not know that this would go out with such a high-interest rate. Set to 20% just a week before the release,” said Mr. B a core developer of the Anchor Protocol in an interview with Korean media outlet JTBC. He added: “I thought I was going to collapse from the beginning. I designed it, but it collapsed 100%.”
According to what Mr. B said, the platform being initially designed to only offer an interest rate of 3.6%, was a key component of stabilizing the Terra ecosystem as it took into account the available funds in Anchor’s war chest. But just after a week before the launch, the developers found out that the plans had been tampered with and cranked up, giving investors a very high-interest rate of 20% for depositing and locking up their TerraUSD Classic (USTC) stablecoins in the Anchor Protocol, instead of the initial 3.6%.
The Interventions
The JTBC Korean report claimed they had collected internal design documents made by Terraform Labs, which wrote about attracting investors with high-interest rates. The developer said he brought this issue up to meet with Terra Luna founder Kwon Do-Hyung (Do Kwon) just ahead of the launch in April 2019, he said: “Just before the release, I suggested to CEO Kwon Do-Hyung that the interest rate should be lowered, but it was not accepted.”
The historical crash of the Terra Classic (LUNC) and the algorithmic stablecoin USTC has led the South Korean government planning to launch a new Digital Asset Committee in June to serve as a sheriff over the country’s crypto industry responsible for policy preparation and supervision.
Do Kwon was summoned to attend a parliamentary hearing on his project crash (Terra) matter in South Korea in mid-May. He has also found himself in serious trouble after the court documents revealed he dissolved Terraform Labs Korea just days before the Terra crash.
Prior to this, in May, South Korean authorities also reportedly issued subpoenas to employees of Terraform Labs, looking into whether there was intentional price manipulation of Terra/Luna and whether the tokens went through proper listing procedures.
Key Takeaway
But even with this incident Do Kwon doesn’t seem to be backing down with the relaunch of the crashed network on May 28 with a new chain called Terra 2.0 or Pheonix-1. His aim with this is to revive the fallen Terra (LUNA), including its algorithmic stablecoin TerraUSD (UST), and also bring their reputation back to an honest one.
